School finance, spatial income segregation, and the nature of communities

In a general equilibrium model that links school and housing markets, a purely public school system (regardless of the degree of centralization) results in substantially more spatial income segregation than a purely private system. However, the combination of a public system with a private school market yields the least residential segregation as housing price distortions from the capitalization of the public system generate incentives for middle and high income private school attendees to live with lower income public school attendees. The impact of vouchers and the sensitivity of results to alternative school production models is also investigated. © 2003 Elsevier Inc. All rights reserved.

Duke Scholars

Author Thomas J. Nechyba Economics